On 18 July 2019, the UK Government launched its initial consultation on the UK Competition and Markets Authority (CMA) recommendations on statutory audit services. The consultation will close on 13th September 2019 and focuses upon the CMA recommendation to give the regulator additional powers to scrutinise both the appointment and ongoing oversight of auditors by the audit committee.
The suggestions include:
• publishing standards for the appointment and oversight processes;
• giving the regulator the right to require reports from audit committees
• giving the regulator the right to place an observer on an audit committee or another part of the audit process in order to oversee compliance with the standards;
• giving the regulator the right to write to audit committees and shareholders to highlight deficiencies;
• giving the regulator the authority to monitor the health of audit firms and intervening when necessary.
• requiring an operational split between the audit and non-audit practices of audit firms, initially the ‘big four’.
The Government are also consulting on a variety of other suggestions for improving the competitiveness of the audit market.